Saint Alphonsus Medical Center - Nampa et al v St Luke's Health System Ltd

Filing 607

MEMORANDUM DECISION AND ORDER. NOW THEREFORE IT IS HEREBY ORDERED, that the private plaintiffs the St. Alphonsus entities and Treasure Valley Hospital are entitled to attorney fees under the Clayton Act, 15 U.S.C. § 26. IT IS FURTHER ORDER ED, that counsel shall submit a stipulated briefing schedule to address the issue of the amount of the attorney fees. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

UNITED STATES DISTRICT COURT
IN THE DISTRICT OF IDAHO
SAINT ALPHONSUS MEDICAL CENTER NAMPA, INC., TREASURE VALLEY
HOSPITAL LIMITED PARTNERSHIP,
Case No. 1:12-CV-00560-BLW (Lead
SAINT ALPHONSUS HEALTH SYSTEM,
Case)
INC., AND SAINT ALPHONSUS
REGIONAL MEDICAL CENTER, INC.
MEMORANDUM DECISION AND
ORDER
Plaintiffs,
v.
ST. LUKE’S HEALTH SYSTEM, LTD.
Defendant.
FEDERAL TRADE COMMISSION; STATE
OF IDAHO

Case No. 1:13-CV-00116-BLW

Plaintiffs,
v.
ST. LUKE’S HEALTH SYSTEM, LTD.;
SALTZER MEDICAL GROUP, P.A.
Defendants.

INTRODUCTION
The Court has before it the briefs of the parties addressing whether the private
plaintiffs – the St. Alphonsus entities and Treasure Valley Hospital – are entitled to
attorney fees. The Court finds that they are entitled to attorney fees.
LITIGATION BACKGROUND

Memorandum Decision & Order – page 1

Following a bench trial, the Court issued a decision unwinding the merger
between St. Luke’s and Saltzer. That decision was appealed and affirmed. See Saint
Alphonsus Medical Center v. St. Luke’s, 778 F.3f 775 (9th Cir. 2015).
Pursuant to agreement of all counsel, the Court bifurcated the issue of attorney
fees. See Docket Entry Orders (Dkt. Nos. 485 & 486). To be decided first is the issue of
whether the private plaintiffs are entitled to attorney fees; that will be followed by a
decision on the amount of those fees, following another round of briefing. Thus, the only
issue before the Court at this time is whether the private plaintiffs are entitled to attorney
fees.
LEGAL STANDARDS
The private plaintiffs seek their attorney fees under Section 16 of the Clayton Act,
15 U.S.C. § 26, which states: “In any action under this section in which the plaintiff
substantially prevails, the court shall award the cost of suit, including a reasonable
attorney’s fee to such plaintiff.” A prevailing or substantially prevailing party “is one
who has been awarded some relief by the court.” Buckhannon Bd. & Care Home, Inc. v.
W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 604 (2001).1 According to
Buckhannon, a litigant must meet two criteria to qualify for fees under this standard.
First, he must achieve a “material alteration of the legal relationship of the parties.” Id. at
604-05. A “material alteration” of the parties’ legal relationship occurs when “the
1

While Buckhannon addressed the term “prevailing party” rather than “substantially prevailing
party,” both sides agree that it governs this case. See Oregon Natural Desert Assoc. v. Locke, 572 F.3d
610 (9th Cir. 2009) (holding that Buckhannon governs analysis under statute providing for fees to plaintiff
who “substantially prevails”).

Memorandum Decision & Order – page 2

plaintiff can force the defendant to do something he otherwise would not have to do.”
Higher Taste, Inc. v. City of Tacoma, 717 F.3d 712, 716 (9th Cir. 2013). Second, that
alteration must be “judicially sanctioned.” Id.
On the basis of these two criteria, Buckhannon rejected the “catalyst theory” for
the recovery of attorney’s fees, holding that relief achieved through voluntary change
prompted by a lawsuit “lacks the necessary judicial imprimatur ” for a plaintiff to qualify
as a prevailing party. In that case, the party seeking fees has not obtained any sort of
court-ordered relief.
The Ninth Circuit has “rejected overly narrow interpretations of Buckhannon, and
held on a number of occasions that judgments and consent decrees are examples . . . but
they are not the only examples of judicial action sufficient to convey prevailing party
status.” Carbonell v. I.N.S., 429 F.3d 894, 898 (9th Cir. 2005) (internal quotations and
citations omitted). A plaintiff also prevails if he obtains a preliminary injunction or a
legally enforceable settlement agreement. Id.
ANALYSIS
The private plaintiffs obtained all the relief they sought – a judicial ruling from
this Court requiring St. Luke’s to unwind the Saltzer merger. That judicial ruling
materially altered the relationship between the parties, and hence entitles the private
plaintiffs to an attorney fee award under the Buckhannon standard discussed above.
St Luke’s disagrees. The Court’s decision, St. Luke’s argues, adopted the claim of
the Government plaintiffs that the merger would raise prices, but stopped there without
considering the private plaintiffs’ argument that the merger would exclude competition.
Memorandum Decision & Order – page 3

Indeed, argues St. Luke’s, the private plaintiffs lacked standing to complain about a price
rise, and so were not even allowed to make the argument that the Government plaintiffs
prevailed upon. Under St. Luke’s reading, the Court’s decision was based entirely on
arguments made by the Government plaintiffs, rendering the private plaintiffs’
participation in the lawsuit superfluous.
It is true that the Court ruled that the merger “will raise costs to consumers,” see
Findings of Fact & Conclusions of Law (Dkt. No. 464) at p. 44, and did not go on to
consider arguments of the private plaintiffs that the merger would exclude competitors.
But even when a court “fail[s] to reach certain grounds” argued by a plaintiff, “the
unaddressed claim may support a fee award” when the plaintiff succeeds on any
significant issue in the litigation and achieves some of the benefit it sought in bringing
the suit. See Gerling Global Reinsurance Corp. of America v. Garamendi, 400 F.3d 803,
809-10 (9th Cir. 2005).
Here, the private plaintiffs achieved all the benefit they sought in bringing the suit,
and succeeded on a significant issue. Importantly, both sets of plaintiffs presented
evidence demonstrating that the merger would result in higher prices. The Government
plaintiffs used this evidence as direct proof of their antitrust claims. The private plaintiffs
used this evidence to argue that if St. Luke’s had the market power before the merger to
raise prices when it purchased physician practices, it would have the market power after
the merger to exclude competitors. See Memorandum Decision (Dkt. No. 230) at p. 3
(refusing to exclude private plaintiffs’ evidence of St. Luke’s ability to control prices
because it is relevant to St Luke’s ability to exclude competition).
Memorandum Decision & Order – page 4

So both sets of plaintiffs pursued this evidence as part and parcel of their case.
While the private plaintiffs pursued it as only part of their case, and the Court did not
address in full their claims, Gerling makes it clear that this is not fatal to their fee
petition. Counsel for the private plaintiffs did not duplicate the work of Government
counsel, and played a major role in discovery, pre-trial proceedings, and the trial itself in
providing evidence that the Court used in finding that the merger would result in higher
prices. The private plaintiffs succeeded on this major issue, and are thus entitled to fees
under Gerling even though the Court did not address their claim that higher prices
demonstrated an ability to exclude competitors.
Ultimately, the private plaintiffs obtained the full relief they sought – the
unwinding of the merger. Under Buckhannon and Gerling, the private plaintiffs are
entitled to their attorney fees. The amount of those fees will be determined after another
round of motions.
ORDER
In accordance with the Memorandum Decision set forth above,
NOW THEREFORE IT IS HEREBY ORDERED, that the private plaintiffs – the
St. Alphonsus entities and Treasure Valley Hospital – are entitled to attorney fees under
the Clayton Act, 15 U.S.C. § 26.
IT IS FURTHER ORDERED, that counsel shall submit a stipulated briefing
schedule to address the issue of the amount of the attorney fees.

Memorandum Decision & Order – page 5

DATED: April 29, 2015

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

Memorandum Decision & Order – page 6